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Budget 2015 reactions: taxation, GST, startups, cashless payments, manufacturing and more


Lots of reactions in, following the NDA government’s second budget announced on Saturday, February 28, 2015. Some of the reactions below have been clipped to remove fluff, and for brevity:

On Taxation:

– Saahil Hoel, CEO & co Founder, KartRocket.com

Tax on royalty/fee for technical services reduced from 25% to 10% will help reduce cost of technology and reduction of Corporate tax to 25% from 30% will help companies divert more money towards investment and growth. However an increase in the rate of service tax will have an adverse impact even though the government is of the opinion that this would help facilitate the transition to GST .

– Divakar Vijayasarthy, Founder, MeetUrPro

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Reducing the tax and withholding rates from 25% to 10% is a hugely positive step. The effective reduction is taxation is more than 22% given the fact that most of the technology agreements are “net of tax” transactions. This amendment makes cost of technology a lot more accessible and affordable to the Indian startups and businesses.

Reduction of corporate tax from 30% to 25% over a period of 4 years would bring India at par with many of the attractive business destinations of the world. Currently the average corporate tax rate is around 23%. However with gradual phasing out of exemptions, the overall change is taxation position seems marginal. The positive takeaway is the possibility of reduced litigation owing to taxation exemptions.

– Bhaskar Pramanik, Chairman-Microsoft India

The reduction in corporate tax, albeit over the next four years has certainly welcome. More because it also comes with the reduction of exemptions. Exemptions create confusion. I welcome the simpler framework the Government is proposing. The service tax rate going up is a concern, because of the impact it could have of driving people to use pirated software. Especially, because of the dual tax on software – the net tax rate for software is above 20%.

– Saurabh Kochhar, MD and Co-Founder – Printvenue.com

It is a sign of relief for the corporates to get tax exempted  which will also reduce tax on businesses to 25% over four years from a current 30%, with a view to boosting spending and job creation

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– Suresh Sharma, Founder & Director , iSpyPrice.com

the reduction in corporate tax from 30 % to 25% over the next four years is encouraging for e-commerce companies as low tax is equivalent to more inflow of cash. Besides this, the tax reduction on royalty fees for technical services from 25% to 10% will make these services more cost-effective and bolster the operations of various tech-based firms

– Gopal Srinivasan, Member of Chennai Angels

This has truly been a break-through budget for the PE / VC industry.  Tax pass-through for all Category I and Category II funds, and the ability to blend foreign capital in AIFs, will provide significantly greater access to funds for Indian PE / VC industry.  This could propel the Indian PE / VC industry from making annual deployment of USD 8-9 Bn to a trajectory of making 3x the current annual deployment (USD 25 – 30 Bn) in the next 3 years.

– Chennapa Naidu Darapaneni, Founder & CEO, MeraEvents.com

The increase in service tax to 14 per cent is surely a burden, especially on small enterprises and startups. Of course, while most of it would be encompassed by the Goods and Services Tax, the Government should have announced some steps to provide relaxation to certain services with a specified threshold limit to ensure that the burden is eased initially.

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As it is, service tax is perceived to be an additional burden and it is transferred to the end-user. Reduction in corporate tax from 30 per cent to 25 per cent is a welcome decision.

– Pardeep Jain, MD, Karbonn Mobiles

As the role of indirect taxes is very important in boosting domestic manufacturing, the proposal of corporate tax cut from 30% to 25 % and reducing taxes on services from 25% to 10% is going to push forward ‘Make in India’ initiative.

– Karan Mehrotra, Co-founder & CEO, Localbanya.com

Service tax increase to 14% – With timeline for implementation of GST being 1st April 2016, the increase in service tax will impact our margins. This is not a welcome move. Raising the Income Tax exemption to Rs 4.4 lakh would be a welcome development for the semi-skilled staff.


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Reduction of Corporate Tax to 25% from 30% with removal of exemptions over the next four years will only result in marginal benefits. However, the industry would have appreciated a clear roadmap on the implementation of the reduction in corporate tax. The deferral of the GAAR provision by 2 years, and the abolition of the Direct Tax Code would also benefit the industry.

But at the same time, the increase in Service Tax from 12.36% to 14% is negative, adversely affecting the consumers and making the services more expensive. The enabling provisions for levy of Swachh Bharat Cess have been introduced, which shall be treated as service tax. In case Cenvat credit is not allowed, the suggested cess at 2% would increase the effective service tax rate to 16%; which will be a huge cost for the telecom industry.


– Sitakanta Ray, Co-founder & Director, MySmartPrice.com

For ecommerce in particular, while the dream of a tax holiday or FDI hasn’t come true, the introduction of GST in 2015-16 will greatly help the e-retailers who have been struggling with the differentiated tax laws.

– Ashish Sood , Co- Founder, Youshine

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It is disappointing that GST implementation has been put forward by another 12 months. Retailers like us, who are looking to establish a Pan-India presence were really looking forward to this announcement.

– Amazon India spokesperson

We are very encouraged by the commitment to implement GST by April 2016 and focus on development of infrastructure.  We believe both are key to ease of doing business by enabling and streamlining the movement of goods and services.  We believe this will enable us to effectively transform the lives of our customers, both, consumers and sellers.

– Karan Mehrotra, Co-founder & CEO, Localbanya.com

We would’ve preferred implementation of GST sooner than 1st April 2016 to allow a consolidation in tax structures across states, goods and services utilized. It would also allow for better financial governance by eliminating the need to customize finance structures in different states basis the prevalent VAT structures.


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The chief concern of the industry, that the increase in rate of tax from current 12 percent (service tax) to a higher rate under GST would increase the cost of telecom service, has not been addressed. The industry had also requested for the compliance requirements under GST to be made uniform, user-friendly and simple for businesses and other stakeholders, which remains unaddressed.

On Startups:

– Sitakanta Ray, Co-founder & Director, MySmartPrice.com

Consolidating startup approvals through ebiz portal by including state approvals would certainly bring down the complexities in setting up business.The government allocation of Rs 1000 crores to create a SETU (self employment and talent utilization) scheme should also greatly motivate young entrepreneurs. In addition to this, the reduction of Corporate Tax from 30% to 25% essentially increases the advantages of starting up versus working for a salaried job. .

– Divakar Vijayasarthy, Founder, MeetUrPro

The setting up of a 1000 cr start up fund created through SETU entrepreneurial innovative fund is a welcome initiative. While the initiative is commendable, the effective implementation of the same needs to be ensured to make the fund a success. Consolidating startup approvals through ebiz portal by including state approvals would certainly bring down the complexities in setting up business. With more and more states participating in this initiative, this portal would eventually act as a single place window for obtaining regulatory approvals and licenses. If implemented, this would be the single most important development to improve the ease of doing business in India.

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– Bhaskar Pramanik, Chairman-Microsoft India

The Government has recognized the need to support startups, and incubators and has acknowledged that a culture of innovation needs to be fostered. Budgetary allocations for incubators, a mechanism for supporting self-employment and talent utilization will allow startups and MSMEs to access the funds and talent, creating new avenues for growth and employment. and provide boost to Digital India, Make in India and Skill India

– Bikash Barai, CEO – iViZ

The initiatives by the government, if implemented properly shall help to accelerate the success of the Indian startup ecosystem and also be one of the leveraging factors for the growth of India as an economy. The government can play a major role in nurturing the young startups before they become big.

– Shivakumar Ganesan, CEO – Exotel

Overall a very interesting budget from the perspective of startups. The 1000 Crore Startup fund, the stress on easing permissions for doing business and decision to allow Foreign Investments in AIF is largely reassuring to the entrepreneur community.

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– Mohit Gundecha | CEO & co-founder Jombay

The FM has clearly given indication of government’s intention to do a lot for startups, beyond just allocation of funds. I will be keen to see if the fineprint provides specifics on ease of access to the funds and if it provides preferential treatment for government purchases to start-ups.

– Gopal Srinivasan, Member of Chennai Angels

Two budget measures that will greatly accelerate the availability of debt capital to unlisted mid-sized companies are: (1) enabling NBFCs (mid-sized) with SARFAESI Act and (2) MSME financing mechanism through the Mudra Bank.

Chennapa Naidu Darapaneni, Founder & CEO, MeraEvents.com

Several measures announced like leaving the choice of Provident Fund to employees, the Rs. 1,000 crore allotted to start-ups and many such decisions will have a long-term positive impact on the country’s economy. However, the budget has not done enough for the startup ecosystem. The Budget has not talked about the Rs. 10,000 crore Venture Capital Fund that it announced in a grandiose manner in the July 2014 Budget. It is not clear if the Rs. 1,000 crore allotted to enable IT start-ups is part of that Rs. 10,000 crore.

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Setting-up of initiatives like Self-Employment Talent Utilisation (SETU), a Techno-financial and incubation scheme, and the Atal Innovation Mission (AIM) will help promote innovation across the industry. We await the details of the facilitative announcements for start-ups and hope to speedy implementation of the Rs 1,000 crore fund. Clarifications on taxation norms for foreign VCs are also positive.

On Cashless Payments:

– Naveen Surya, MD, Itzcash

The Payments Bank revolution, now being spearheaded by the proposed transformation of the Postal Offices will further widen the market for payment solutions, thereby enabling players such as us to play a constructive role in fostering financial inclusion in the country. We also welcome incentives for transactions done electronically with debit/credit and other cards.”

– Pramod Saxena, Founder & MD, Oxigen Services

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In continuation of the PM Jan Dhan Yojana, we believe that this is an additional positive push to promote cashless transactions and usage of digital money. The digitization of money at lower level and the JAM trinity (Jandhan, AADHAR and Mobile Access)  will redefine and transform the economy to cashless. We are very positive on this push and support digitization at all levels.

– Mr. Amrish Rau, MD, Citrus Pay

This welcome move by the FM will provide a boost to electronic payment transactions, Online and also at POS. A similar approach helped Korea to move to almost 60% cashless transactions in retail. This will help the GDP by almost 0.5%-1% over the next few years

– Suvro Ghosh Founder HelpMeDoc.in

An attempt to make transactions cashless to stop black money exchanges is a well-thought move. This step will reveal its real value, gradually, in the times to come.

– Sanjay Deshpande, angel prime

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The hidden cost of cash is as high as 3-5% – I’m glad to see that moving to cashless is a high-priority. I would like to see concrete measures that make electronic payments more attractive than cash – to the payer and the payee.

On financial inclusion:

– Rishi Gupta, MD & CEO – FINO PayTech Limited

Access to formal finance to agriculture sector through Rural Infrastructure Development Fund and Pradhan Mantri Krishi Sinchayee Yojana is a significant development that will help bottom of the pyramid segment get benefits of formal banking. With DBT of more schemes to follow, meaningful financial inclusion is gradually taking shape

On manufacturing:

– Devita Saraf, CEO and Design Head – Vu Technologies

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Government’s make in India initiative has been initiated to encourage the local manufacturers. But in contrast I believe the budget has been quite disappointing. We were hoping for some standard operating procedures whereas the excise duty has been increased on manufacturing. I believe that to support their own initiatives and the country, they should have done much more.

– Pardeep Jain, MD, Karbonn Mobiles.

By focusing on progressive steps like reducing the rates of basic customs on 22 items including certain inputs, raw material, intermediates and components, the Union Budget 2015 is aimed to strengthen domestic manufacturing.By proposing the full exemption on all goods and reducing the SAD on imports of certain other inputs and raw materials, the Finance Minister has created a roadway for a robust manufacturing in the country.

– National President of Indian Cellular Association, Mr Pankaj Mohindroo

The Excise Duty differential of 11% on domestically manufactured mobile phones over imported phones. The step up in the differential from 5% in the pre-budget dispensation to the current 11% is designed to create the necessary pull for investments from India and abroad into the industry and will realize the “Make in India” programme. The removal of 4% SAD for manufacture of all Electronics goods in the WTO IT Agreement will help create the manufacturing ecosystem.

On Tourism:

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– Swaminathan Vedaranyam Chief Executive Officer, VIA.com

The  Finance Ministers’ proposal to  increase Visa on arrival scheme  from the current 43 countries to 150 countries is a very welcome move as it will push the incoming to India dramatically which will in turn help the entire local eco system of India. It’s proposal to  invest in heritage sites was a much awaited and extremely beneficial move as  there was an urgent need for well-defined policies and clear commitments to ensure that all cultural heritage points are given more attention with improved infrastructural facilities.

– Shefali Singh Founder of Mysha,

The fact that the government will open up Visa on Arrival facilities to 150 countries, from the current 43, will result in a high inflow of tourists. The emphasis on restoration of World Heritage Sites is also likely to bode well for the sector as it will induce both domestic and foreign tourists to travel to these spots.

– Hari Nair, Founder & CEO, HolidayIQ

Visa on arrival being extended to 150 countries is a huge step for Indian tourism. In addition, Tourism is a sector that is a beneficiary of improvements across multiple areas. The focus of Budget 2015 on areas such as infrastructure, skill development and rural development has the potential to provide a big tailwind for Indian tourism.

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– Aloke Bajpai ceo & co-founder at ixigo.com

We are quite happy with the investments in travel and tourism related infrastructure announced by the FM, specially the development and upgradation work at 25 major heritage sites across India as well as infrastructure and sanitation improvement in rural areas where there is untapped tourism potential .Visa on arrival being extended to 150 countries across the world is another big booster for the tourism industry – we expect that the foreign tourist arrivals to India can potentially reach 10-12 million per annum once this is implemented.

On Education:

– Manish Agarwal, Reliance ADA

I would like to comment on setting up of gaming and animation college at Arunachal Pradesh. Great step In right direction as paucity of skilled work force in gaming is biggest challenge for Indian gaming companies .. Would love to have gaming and animation courses offered in every university so that we can truly become leading nation in bringing out gaming IPs

On real estate:

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– Sumit Jain, Co-Founder and CEO, CommonFloor.com

Allocation of over INR  22K crore for housing and urban development for FY 2015-16 is a welcome step in this regard and will pave way for future realty growth. Moreover, the FM said that the government plans to build 60 million (6 crore) homes – 40 million in rural areas and 20 million in urban areas – by 2022 under their vision “Housing for All.” Further, the government’s proposal to introduce Black money Law will bring in more transparency in real estate transactions.

Areas that were ignored completely in the budget included 100 Smart Cities and the Real Estate Regulatory Bill. Also, tax limit for home loans was untouched. It was expected to be increased as this step would have given a major push to property sales.

Read also:

Budget Expectations 2015: Online Service Tax Relief, GST, Startup Fund & More

Budget 2015-16 Live: GST from April 1 2016, Startup Incubation Program, Cashless Transactions

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Govt proposes setting up a tech startups incubation program – Budget 2015

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